From green to sustainable supply chain management

In BearingPoint’s 5th Supply Chain Monitor, we found evidence that companies’ green supply chain efforts have lost some of their momentum since our last report Green Supply Chain Monitor, from awareness to action (2010-2011). On the other hand, social aspects of corporate responsibility are moving up the agenda rapidly.

Companies have now largely harvested the low-hanging fruits - for example training drivers to be more economical with fuel, and optimizing networks through dynamic routing and scheduling. The loss of regulatory momentum driven by the failed climate conferences prior to Paris 2015 hasn’t helped to motivate companies to invest in green or sustainable supply chains. There is a widespread view that implementing basic green actions in the supply chain is no longer a source of competitive advantage. Carbon accounting is established, structured and expected now: if companies are only investing in rudimentary improvements this will not impress the market. Companies need to do more, then, but the challenge is how to move forward.

For 70 percent of companies in Europe, the social aspects of a supply chain were a strategic priority in their supply chain management endeavors with a further 12 percent saying this would be the case within the next 1–5 years. In general, social aspects within the supply chain are at a maturity level equivalent to that of carbon reduction activities some 5–8 years ago, though there is a desire to deliver a more comprehensively sustainable supply chain.

Primary drivers for improving social responsibility efforts in Europe are regulatory pressure and executive management demands. As for consumers, they are increasingly selecting products and suppliers that are “fairer”, or more sustainable.